Corn production this year is estimated to be 12.201 billion bushels, 231 million bushels or 1.9 percent below USDA’s October crop estimate of 12.432 billion bushels, according to the latest report from AgWeb. AgWeb estimated corn yield at 145.03 bushels per acre, up 2.14 bushels per acre from its estimate of last week.

AgWeb’s soybean harvest is ahead of USDA’s estimate with 3.189 billion bushels expected by AgWeb, 130 million bushels above USDA’s October estimate of 3.059 billion bushels. Reported soybean yield was put at 45.61 bushels per acre by AgWeb compared with its estimate of 46.05 bushels reported last week and USDA’s October estimate of 41.5 bushels per acre. AgWeb’s estimates are based on reported data from more than 875 corn farmers and more than 450 soybean farmers.

Corn prices may return to $7 per bushel as strong demand from U.S. ethanol producers and prospects for stepped-up demand from China may boost U.S. corn exports, Heather Jones with BB&T Capital Markets reported. Corn prices were at a seven-month low at the end of September, but now December corn futures have rallied 10 percent, partly because of recent, large purchases by China. In light of a tight global supply outlook, corn probably will not trade much below $6 per bushel and potentially could reach $7 over the near-term, Jones said.

Chinese corn imports during 2011-12 are expected to double from the previous year to 2 million metric tons, even with China’s corn harvest increasing nearly 3 percent, to 182 million tons, USDA forecasted. However, the U.S. Grains Council and others estimate China’s crop below USDA’s forecast. The potential China may have to step-up corn imports, combined with strong demand from top importers such as Mexico and Japan, is most likely to pressure U.S. ending stocks of corn, now estimated to be a 16-year low in 2012. After China purchased U.S. corn “in a meaningful way” in recent weeks, the country’s demand profile for the remainder of the year “is a key wild card and projections of its import demand vary widely,” Jones said in her latest newsletter. A mitigating factor for China’s corn needs, is the country’s “vast” stockpiles of wheat, “which it may use to fill some feed demand,” the analyst added.

Certain other analysts predict China will annually import at least 15 million tons by 2015. “There is concern whether China’s yield growth will provide enough new corn to feed its booming livestock and poultry industries, Mike Dwyer with USDA’s Foreign Agricultural Service told AgWeb earlier this month. He noted that crop yields in India are about half the world average. This situation provides untapped potential for production growth, but to reach that potential, major policy changes need to occur to attract investment in agriculture. Currently, India’s agricultural policies favor small farming operations and low-income consumers.

Dwyer reported that USDA price projections for wheat and soybean are to remain high through the rest of the decade even though globally more land will be coming into production, an increase in yields, and existing land will be cropped more intensively in some developing countries, including India. Finding enough land to meet growing demand for soybean production will be the biggest challenge moving forward, says Bill Lapp, president of Advanced Economic Solutions. Rising palm oil production might be enough to offset rising demand for vegetable oil, but protein meals for livestock will be in shorter supply. “Prices on many crops might be peaking, and we could see them scale back if acreage and production catch up with world demand,” Lapp added.